AAR CEO: Room for both CBR and pipelines

Contrary to some speculation, North American railroads stand ready to do their share in supplying crude-by-rail (CBR) service to complement oil transport by pipeline, Association of American Railroads President and CEO Edward R. Hamberger said Jan. 23, 2014.

"Because our U.S. freight railroad network is strong and flexible, the industry is rising to meet the challenge of safely hauling the dramatic increase in domestically produced oil," Hamberger said, addressing energy and financial energy executives in Washington, D.C. "As an industry, we are able to access a 140,000 mile network to meet the needs of oil-producing customers while additional pipeline capacity is coming online in North America."

U.S. freight railroads transported nearly 234,000 carloads of crude oil in 2012, up from 9,500 carloads in 2008, AAR said. That number could surpass 400,000 carloads in 2013, though numbers have yet to be tallied.

"As we develop these new energy resources, policymakers are asking, 'Which mode is best for transporting crude oil, freight rail or pipelines?' The answer is both," Hamberger said, adding, "There is, and will be, plenty of crude for all modes to move."

On Wednesday, Jan 22, Alberta, Calgary-based TransCanada Corp. said it had begun delivering crude through part of the controversial Keystone Pipeline, located between Oklahoma and the U.S. Gulf Coast. The pipeline's projected capacity is about 700,000 barrels per day, though at first TransCanada plans to move just 300,000 barrels per day.

Acknowledging growing concerns over CBR safety, AAR noted, "Rail companies own the locomotives and tracks that freight railroads operate on, but shippers and railcar companies own nearly all of the nation's tank cars, while their customers own the contents of those cars. This multi-industry dynamic makes for a complex safety environment, requiring a high degree of coordination among all parties."